How to Save Up a Down Payment for an SBA Loan

If you have done any research into SBA loans, then you will know that you often require a down payment to secure one. You can get some SBA loans without collateral, but these are only for very small amounts of money.

If you want to borrow anything substantial, then you will often have to put down collateral, and this usually comes in the form of a down payment.

The SBA appreciates a down payment because it is a personal investment on your behalf. They will feel better investing in a person/company who has also put their own money on the line because it implies that you are more invested, and that you will be more motivated to make it work.

So, individuals who are willing to put their money on their line will be viewed more favorably.

But, gathering the money for that initial down payment can often be quite difficult. Most SBA loans will require a down payment of 30% of the total value of the loan, and this can often be quite hard to achieve. So here are some other ways that you can save up a down payment for an SBA loan.

Savings and Stocks

One of the most efficient ways to get the down payment for your SBA loan is to use personal savings. Most people have a personal savings account, whether it be a bank account or a stocks account, so this is a good place to begin when gathering your down payment.

A lot of people will not have enough money solely in their personal savings account to cover this down payment, which is why you should also consider liquidating your stocks to gather all the money that you need.

Use Family Gifts

This isn’t an option that most people would go for, but if you have generous friends and family, then they can help you gather your down payment. The SBA 7(a) loan program is one of few loans that allow the down payment to be supplied by a person who isn’t the individual applying for the loan.

So, this is another option to consider if you are struggling to gather your down payment. Additionally, you can use a spouse’s income as a source of cash for your down payment, so this is something else to think about.


As you are probably aware, one of the most common ways that people gather collateral for any loan is to use their mortgage as collateral. So, one way to gather the down payment for your SBA loan is to refinance against your mortgage. This will only be a viable option if your house has a high value and interest rates are low.

If you also have cars or a boat that has a high financial value, you may be able to refinance against these to gather the money required for collateral for your SBA loan.

Personal Loans or Credit

Alternatively, you could choose to take out a personal loan or credit to gather the down payment for your SBA loan.

To some, this might seem counterproductive as you will be using a loan to receive a loan, but it is actually a very common practice. Some people use existing credit cards to gather their down payment, others free up room on existing loans to reach the required figure. 

You might not think this is the best idea financially, but it is actually a perfectly acceptable way to gather your down payment, according to the SBA. So, this is always an option.

Business Assets

If your business is doing well, and you need an SBA loan to progress your business, then you can use existing business assets to gather the down payment for your loan.

For example, you could sell equipment that you no longer use, or even sell off some real estate if you desperately need the loan. If you choose to go down this route, then it is best to use an escrow company to handle the freeing up of your assets to gather the necessary funds for your down payment.

Business Partner

Alternatively, you could get a business partner to provide the down payment for your loan. If you haven’t got a business partner, then you could instead look for a new investor. If you make a good pitch, then you might be able to find an investor that is willing to provide your down payment in exchange for equity in your business.

This doesn’t necessarily mean that this person has to be a business partner, remember that some people are willing to just invest and leave the day to day running of the business to you.

Hard Money Loans

If you are completely stuck, then you might be able to get a hard money loan to gather the entirety of the required SBA down payment. Hard loans require real estate to secure them, and they also have aggressive pay back rates. But, they do offer smaller loan amounts, meaning that you can secure the whole of your down payment without any excess. So, it is worth considering.

Retirement Funds

Finally, you could use your retirement funds to gather the down payment for your SBA loan. Both 401(k) and IRA accounts can be used as a down payment if you go through a Rollover for Business Startups (ROBS). This isn’t the easiest route to go down, and you will need to meet certain criteria to qualify. But, it is an avenue to explore if you find yourself struggling to gather the down payment for your SBA loan.


In short, you might find the prospect of gathering your SBA loan down payment intimidating, but there is no need to worry. As you can see, there are lots of different ways that you can gather the required down payment for your SBA loan, so there are many avenues to explore. Don’t let the 20-30% figure scare you, it might be a lot of money, but this figure is also achievable. 

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